Purdue Hutcheson Extension Presentation

Extension’s Vital Role in Open-Source Economic Development

Galaxy III Celebrating the Extension System: Strengths, Diversity, &

Unique Qualities September 17, 2008 – Indianapolis, Indiana

Scott Hutcheson, Assistant Program LeaderEconomic & Community Development

Purdue Extension

Economic Development 101

Source: Ed Morrison, Distributed under a Creative Commons 3.0 license.

Our Grandfather’s Economy

Wealth was built at a rate the world had never before experienced

First Curve – Wealth driven by vertical business models

The S Curve Caught Up with Our Grandfather’s Economy

Source: Ed Morrison, Distributed under a Creative Commons 3.0 license.

The First and Second Curves

Source: Ed Morrison, Distributed under a Creative Commons 3.0 license.

We live in an Open-Source World

We live in an Open-Source World

From Hierarchies to Networks

The 2nd Curve is Our Grandchildren’s Economy

Second Curve – Wealth driven by network business models

The job of our generation is to manage the transition between our grandfather’s economy and our

grandchildren’s economy.

Source: Ed Morrison, Distributed under a Creative Commons 3.0 license.

Open Source Economic Development

Linking and Leveraging

Source: Ed Morrison, Distributed under a Creative Commons 3.0 license.

Open Source Economic Development

No Single Strategy Many Strategies

OSED Strategies Are Asset-Based

2nd Curve strategies involve linking and leveraging assets in five “asset networks:”

– Brainpower– Innovation– Quality places– Community Stories– Civic Collaboration

Source: Ed Morrison, Distributed under a Creative Commons 3.0 license.

Success in the 2nd CurveCommunities will prosper in the Second Curve with balanced strategies that...

– Build world class brainpower– Translate brainpower into wealth through

innovation and entrepreneurship networks– Create quality, connected places where “hot

spots” can develop– Create new stories about the community– Continuously strengthen habits of civic

collaboration

Integration of Perspectives

Source: Ed Morrison, Distributed under a Creative Commons 3.0 license.

Building Word-Class Brainpower• Early Childhood• Pre-K• K-12• Technical programs• Community college• Universities• Workforce Development• Lifelong Learning

• Brainpower

The average community knows more about its solid waste system than it knows about its brainpower system.

Mapping Brainpower Flow

Source: Ed Morrison, Distributed under a Creative Commons 3.0 license.

What is Extension’s Role in the Brainpower Game?

• Be seen as an Extension of the university – the entire university

• Bring STEM/SET resources to the community

• Bring stakeholders together to map the flow of brainpower

Innovation & Entrepreneurship

• Introduction of new products & processes each year

• Only 15% of businesses are typically innovators – usually have high growth trajectory

• When 50% of business are innovators you have an entrepreneurship/innovation culture

Innovation is Not Just “High Tech”

• A BBQ restaurant starts bottling and selling sauce

• A dry cleaners develops a new “green”process and licenses the new process

• A beauty shop develops a new way to train stylists and goes nationwide

http://www.acenetworks.org/upload_files/file/Regional%20Flavor%20June.pdf

A Tale of Two…• Entrepreneurs• Cities

A Tale of Two EntrepreneursA Tale of Two Entrepreneurs……and Two Citiesand Two Cities

• Founded in Washington (State) in 1971• Initial investment - less than $8,000• 2006 sales were $7.8 billion• Created 145,800 jobs• This is their founder

A Tale of Two EntrepreneursA Tale of Two Entrepreneurs……and Two Citiesand Two Cities

• Founded in Washington (State) in 1971• Initial investment - less than $8,000• 2006 sales were $7.8 billion• Created 145,800 jobs• This is their founder• This is their logo

A Tale of Two EntrepreneursA Tale of Two Entrepreneurs……and Two Citiesand Two Cities

• Founded in Washington (State) in 1971• Initial investment - less than $8,000• 2006 sales were $7.8 billion• Created 145,800 jobs• This is their founder• This is their logo

A Tale of Two EntrepreneursA Tale of Two Entrepreneurs……and Two Citiesand Two Cities

• Founded in Indiana in 1985• Initial investment - less than $2,000• 2006 sales were $1 billion• Created 14,743 jobs• This is their founder

A Tale of Two EntrepreneursA Tale of Two Entrepreneurs……and Two Citiesand Two Cities

• Founded in Indiana in 1985• Initial investment - less than $2,000• 2006 sales were $1 billion• Created 14,743 jobs• This is their founder• This is their logo

A Big Difference Between A Big Difference Between Starbucks and Papa JohnStarbucks and Papa John’’ss

A Big Difference Between A Big Difference Between Starbucks and Papa JohnStarbucks and Papa John’’ss

The Billion $ QuestionThe Billion $ QuestionWhat makes a community “sticky” when it comes to its entrepreneurs?

WeWe’’re finally beginning to learn re finally beginning to learn about Entrepreneursabout Entrepreneurs

Think of Innovation and Think of Innovation and Entrepreneurship as a HorseraceEntrepreneurship as a Horserace

Innovation & Entrepreneurship: A Horse Race

• The Horse – The Innovation

Innovation & Entrepreneurship : A Horse Race

• The Horse – The Innovation• The Jockey – The Entrepreneur

Entrepreneurship

• The Horse – The Innovation• The Jockey – The Entrepreneur• The Track – The Community

Community Support Systems for Community Support Systems for Innovation & EntrepreneurshipInnovation & Entrepreneurship

Taking Care of Taking Care of the Trackthe Track

The Innovation and Entrepreneurship-Supportive

Community• Supportive policy environment• History, culture, institutional memory• Attitudes about failure• Collaborative support organizations• Celebrate innovations andentrepreneurs• An information-rich environment

WhoWho’’s Job Is it to Tend s Job Is it to Tend to the Track?to the Track?

• Chamber?• LEDO?• Elected Officials?• Banks?• Schools/University?• Extension?

Economic Gardening

http://www.littletongov.org/bia/economicgardening/

Economic Gardening• Littleton, CO developed and began to

execute the strategy in 1989• Focused on “wealth” creation not “job”

creation• Eliminated all incentives and tax breaks for

business recruitment• Since 1989, more than doubled the

number of jobs from 15,000 to 35• Sales tax revenue tripled from $6.8 million

to $19.6 million

Economic Gardening

• Information• Infrastructure• Connections

Entrepreneurship Business Information Network (eBIN)

• Inspired by the Economic Gardening Model• Partnership of

– Purdue Krannert Business & Economic Library– Purdue Extension– Small Business Development Centers

http://pcrd.typepad.com/ecd/2007/08/coming-soon-to-.html

Help entrepreneurs answer questions like:– What other products or services are out there that are

similar to mine?– Who are my potential customers and how do I reach

them?– What are my potential customers like?– What are the latest trends in my industry?– What legislative issues could effect my business?

Marketing Lists• Business & Company Resource Center - US and International

company database with profiles, financials, rankings, company history, industry overview, and related associations.

• Reference USA - US company database that includes subsidiaries and divisions. Provides brief profiles and contact information with very powerful search capabilities for generating lists of potential customers or competitors.

Industry Trends• Bizminer - Contains market analysis and financial analysis for 100s

of industries. Excellent source of information for small business planning with 3 yrs of data for developing projections and financial targets.

• MarketResearch.com (Academic) - Demographic and market-specific research information.

• Frost Market Reports - Manufacturing and technology-related market research information. Coverage is international in scope.

eBin Data Resources

Customer Profiles• Choices III - Survey of consumer buying and media habits.

Significant flexibility to determine potential target markets and advertising opportunities.

• MediaMark Reporter - This database provides profiles of American consumers - who they are, what they buy, what they think, and how to reach them.

Journal Articles and Business News• Business Source Premier - Business magazine and journal article

databases; significant full-text with deep historic back file. Also contains company profiles, SWOT analysis, industry profiles and market research briefs.

• Factiva - General news, magazines, business news, international publications and US newspapers content. Also contains public company profile/financial information.

• Regional Business News - Regional (US & International) business magazines.

eBin Data Resources

Legislative• Lexis Nexis Academic - US laws, regulations

and court cases at the national and state level. Also contains significant news/newspaper content as well as company information.

• RIA Checkpoint - Tax laws, rulings, and regulations.

Agribusiness• Agricola - Agricultural database of journal

articles and research reports.

eBin Data Resources

Innovation Isn’t Only about New Enterprises

We need to build networks to help existing business be more innovative?

An Innovation and Entrepreneurship Strategy

Identifying Innovation Assets

Linking & Leveraging Assets• Move university innovations into the region’s

“star” industries – Identify Strongest Regional Clusters– Identify Relevant university Innovations– Recruit Pilot Industries

• Use an Enterprise Wide approach to move innovations into industry through:– Tech Transfer– Technical Assistance– Skill Development at all levels

Unlocking Rural Competitiveness• Funded by the U.S. Economic Development

Administration• Research conducted by the Purdue Center for

Regional Development and the Indiana Business Research Center

Unlocking Rural Competitiveness

Database, analytical tools, and processes to help rural regions

assess their economic competitiveness and create

strategies for growth and development

http://www.ibrc.indiana.edu/innovation/

Tools: County-Level Cluster Analysis

17 Clusters and 6 Sub-Clusters1. Advanced Materials2. Agribusiness, Food Processing and Technology3. Arts, Entertainment, Recreation and Visitor

Industries4. Biomedical/Biotechnical (Life Sciences)5. Business and Financial Services6. Chemicals and Chemical-Based Products

County-Level Cluster Analysis7. Defense and Security8. Education and Knowledge Creation9. Energy (Fossil and Renewable)10. Forest and Wood Products11. Glass and Ceramics12. Information Technology and Telecommunications13. Transportation and Logistics14. Manufacturing Supercluster (6 subclusters)

• Primary Metal Manufacturing• Fabricated Metal Product Manufacturing• Machinery Manufacturing• Computer and Electronic Products Manufacturing• Electrical Equipment, Appliance and Component

Manufacturing• Transportation Equipment Manufacturing

County-Level Cluster Analysis15.Mining16.Apparel and Textiles17.Printing and Publishing

Example: Agribusiness Cluster

Innovation Strategies• Nano-structured Coatings – Innovations for

tool and die shops• Energy Efficiency – Immediate cost savings

for energy-intensive manufacturers• Agribusiness Supply Chain Innovations –

Focusing on supply-chain issues at every level in the supply chain

Nano-structured Coatings•Match a industry need (i.e., tool and die shops) with a university innovation•Integrate the innovation into the industry

– Tech Transfer– Technical Assistance– Skill Development – Nano-structured Coatings Technologist

•Integrate into the community college tool-and- die program

http://news.uns.purdue.edu/x/2007b/071025BozicWIRED.html

Extension’s Role in Entrepreneurship & Innovation• Make E&I a topic of discussion in the

community.• Connect to non-Extension university

partners.• Host innovation showcases.

Civic Collaboration

• New perspectives• New skills

Types of Public Issues

From Heifetz, R. (1998). Leadership without Easy Answers. Belknap Press.

Types of Public Issues

From Heifetz, R. (1998). Leadership without Easy Answers. Belknap Press.

Types of Public Problems

Type 1Fix my pothole!

QuestionWhat Type II and III community issues have you experienced?

- Type II – Clear Problem/Unclear Solution- Type III – Unclear Problem/Unclear Solution

Balance Open Participation with Leadership Direction

• No single person, organization, or institution has all the answers

• No one is in charge• Mass participation

AND strong leadership is needed

Source: Ed Morrison, Distributed under a Creative Commons 3.0 license.

Civic Collaboration: Social Network Theory

Social Anthologist J.A. Barnes coined the term in his 1954, Class and Committees in a Norwegian Island Parrish.

Social Network TheorySocial network theory views social

relationships in terms of nodes and links. Nodes are the individual actors within the networks, and links are the relationships

between the actors

Six Degrees of Separation

Almost everyone has a “small world” story.

What’s yours?

Social Network Theory Applications

• Sociology• Anthropology• Information Technology• Organizational Development• Community and Economic Development

Building Community by Building Networks

Assumptions• Communities are built on connections.• Better connections usually mean better

opportunities.

Building Community by Building Networks

Questions• How do we build connected

communities that can take advantage of opportunities?

• How does success emerge from complex interactions?

Two Components of a Network

NodesPeople, groups, or organizations

LinksRelationships,

flows, or transactions

What’s the Value of ONECell Phone?

What’s the Value of TENCell Phones?

Patterns of Effective Networks1. Birds of a feather flock together2. Diversity is important3. Multiple paths between nodes4. Some nodes are more prominent than

others• Hubs• Brokers• Boundary spanners

5. Most nodes connect indirectly

Networks MUSTMUST GrowA non-growing network results in small

and dense clusters with little or no diversity. The lack of outside information, and dense cohesion within the network

removes all possibility for new ideas and innovations.

Network Building Exercise• Exchange business

cards with someone you do not know

• Find one thing you have in common

• Decide on a follow-up activity– phone call– information exchange– introduction

Knitting the Net: Four Phases1. Scattered Fragments2. Single Hub-and-Spoke3. Multi-Hub Small World4. Core-Periphery

ACEnet Case StudyACEnet provides a wide range of assistance to food, wood, and technology entrepreneurs in 29 counties of Appalachian Ohio

Scattered Fragments

ACEnet: Scattered FragmentsBegan weaving the network by asking questions:

• From whom do you get new ideas that benefit your work?

• From whom do you access expertise that improves your operations?

• With whom do you collaborate?

Hub and Spokes

ACACEnet: Creating New Hubs

Kitchen Incubator became a hub for restaurateurs and farmers

Multi-Hub Small World

ACEnet: Multi-Hub Small World

• Farmers Market• Outdoor Café• Restaurant

Association

Core/Periphery Network

ACEnet: Action at the PeripheryDeveloped the Appalachian Ohio Regional Investment Coalition to bring in additional resources.

Core/Periphery Network• Core includes the key community members• Periphery includes three groups of nodes

usually tied to the core with looser ties:– Those new to the community working their way to

the core– Bridges to diverse communities elsewhere– Unique resources that reside outside the

community

Networking Worksheet

1. Scattered Fragments2. Single Hub-and-Spoke3. Multi-Hub Small World4. Core-Periphery

Becoming a Network Weaver

Network “weaving” is not just networking or schmoozing!

Seven Levels of Network Seven Levels of Network WeavingWeaving

7. Introducing A and B in person and offering a collaboration opportunity to get A and B started in a successful partnership.

6. Introducing A and B in person and contacting A and B afterward to nurture the connection.

5. Introducing A and B in person.4. Doing a conference call introduction of A and B3. Doing an email introduction of A and B2. Suggesting to A that A should talk with B and then contacting B to

let B know to expect a call from A1. Suggesting to A that A should talk with B

Moving from Weaver to Facilitator• A facilitator identifies new weavers who

will eventually take over most of the network building and maintenance.

• If the change is not made, the network remains dependent on the central weaver and his/her organization.

• This transition is needed for the network to increase its scale, impact and reach.

Starting with a disconnected community, network builders can start weaving together the necessary skills and resources to build simple

single hub networks, followed by a more robust multi-hub network, concluding with a resilient

core/periphery structure – maximized for learning and implementation.

For More Information on Social Networks

Much of this material was adapted from the work of Valdis Krebs, developer of

INFLOW software. See www.orgnet.comfor more information.

Strategic Doing Helps Us Build Networks

We need to move our thinking from events and “programs” to processes….

Communities are moving toward civic process that focus on Strategic Doing

Strategic Doing1. What could we be doing together?

– Exploring our assets to find new opportunities2. What should we do together?

– Focusing on one opportunity at a time and defining, as clearly as possible, the “strategic outcomes” we want.

3. What will we do together?– Launching new initiatives by aligning our resources with “link

and leverage” strategies.4. What are we learning together?

– Learning what works by executing and measuring what happens

Web 2.0 Tools Are Needed

Web 2.0 Tools

• Blogs• Wikis• Capturing & Sharing Content• Forums

Web 2.0 Tools

http://shoutyoungstown.blogspot.com

http://www.chicowiki.org

Extension’s Role• Developing community-based social

networks?• Being a catalyst for Strategic Doing?• Adopting and promoting Web 2.0 tools?

ContactScott HutchesonPurdue University

Purdue Extension Economic & Community DevelopmentPurdue Center for Regional Development

1201 West State Street, #227West Lafayette, Indiana 47907-2057

(765) 494-7273hutcheson@purdue.eduhttp://pcrd.typepad.com

http://pcrd.typepad.com/ecd

This presentation is available for download and discussion at the Purdue Extension ECD blog – http://pcrd.typepad.com/ecd